Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Gold Market Update - COT Report Bearish

Commodities / Gold & Silver May 15, 2007 - 01:51 AM GMT

By: Clive_Maund

Commodities In the last update, published on or after 16th April, we expected gold to drop back from the $690 area due to the bearish COT structure, and that is what has happened. The latest COTs are not good news for bulls, with the Commercial shorts still at a high level - high enough to preclude a significant advance in the near future, and to maintain the risk of a substantial decline.


Gold Market Update - COT Report Bearish

On the 2-year chart we can see how gold is being shepherded higher by its long-term 200 and 300-day moving averages, but as it lacks the oomph to get on with it and break out above last year's highs around $730, it is now rolling over and being forced into an increasingly confined space between the trendline shown, or at least the moving averages, and the overhead resistance at and towards $730. The situation is clearly becoming increasingly tight which must force a breakout one way or the other soon, and sadly for the bulls, the latest COT figures show that the risk right now - or as of 3 days ago, as the COT figures are released 3 days late in order to give big money and insiders the edge - is to the downside, notwithstanding any brief rally.

The fact that the April high was only a little above the February high is also a sign of weakness. What we will need to see in coming weeks, or over the next month or two, as a prerequisite for a gold breakout above $730, is a significant improvement in the COT picture, with a much lower Large Spec long and Commercial short position. In the meantime, traders should be prepared for surprises to the downside. If gold does break below first the trendline and then its long-term moving averages, it will at best lead to a large extended trading range developing between the strong support in the $550 - $570 area and the resistance at last year's highs around $730. At worst it will mean that a Double Top has formed and the bull market is over.

The COT chart shows the extent of the Commercial short position and the Large Spec long position that are thought to be at a level that will prohibit any significant advance in the near future

The COT chart shows the extent of the Commercial short position and the Large Spec long position that are thought to be at a level that will prohibit any significant advance in the near future while at the same time making downside risk considerable. Traders should orient themselves accordingly. Enrico Orlandi, in an article published recently on the 3rd May, made the following observation about the Commercials: “What I'm trying to say here is that people buy gold for the wrong reasons. If your reasoning is wrong, then it's almost a sure bet your timing will be wrong. Enter the Commercials: very large, sophisticated, smart, unemotional traders who make their living off of people with faulty reasoning. And they've got it down to a science. They suck you in, clean you out, and send you home packing and a lot poorer for the experience.”

The writer understands that the foregoing makes fairly depressing reading for gold and gold stock bulls, but does this mean you should fold your tent and call it a day? Unless you insist on buying great lumpen stocks that slavishly follow the indices, the answer is definitely not! As many of you are aware, we haven't been letting the grass grow under our feet, there are always opportunities out there, and although not all of our stocks are up, and some are down although mostly not by much, we have recently done very well with stocks like Bactech Mining , Baja Mining , Bonaventure , Golden Phoenix , Industrial Minerals , Silvermex Resources , Sundance Resources , United Bolero , Vangold , especially when one considers that these gains were racked up very quickly. ,

By Clive Maund
CliveMaund.com

The above represents the opinion and analysis of Mr. Maund, based on data available to him, at the time of writing. Mr. Maunds opinions are his own, and are not a recommendation or an offer to buy or sell securities. No responsibility can be accepted for losses that may result as a consequence of trading on the basis of this analysis. Mr. Maund is an independent analyst who receives no compensation of any kind from any groups, individuals or corporations mentioned in his reports. As trading and investing in any financial markets may involve serious risk of loss, Mr. Maund recommends that you consult with a qualified investment advisor, one licensed by appropriate regulatory agencies in your legal jurisdiction and do your own due diligence and research when making any kind of a transaction with financial ramifications.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in